Which of the Following Is a Monetarist Approach to a Recession

question 90

Multiple Choice

Which of the following is a monetarist approach to a recession?

• A) Increase government spending.
• B) Patience or a laissez-faire policy.
• C) Provide tax incentives to increase investment.
• D) Expand the money supply at a faster rate to stimulate spending.

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Definitions:

Real Interest Rate

The interest rate that has been adjusted to remove the effects of inflation, reflecting the real cost of borrowing.

Consumption

The action of using up a resource or goods, often referring to the rate at which consumers purchase and use products and services.

Real Rate of Interest

The rate of interest an investor expects to receive after adjusting for inflation, indicating the real cost of borrowing.

Nominal Rate

The stated interest rate on a loan or financial instrument, not adjusted for inflation.